COVER STORY

Monday

01

October , 2018

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The Indian real estate sector seems to have overcome the initial crisis posed by demonetisation. It is currently witnessing high growth due to a rise in demand for office and residential spaces. According to the data released by the Department of Industrial Policy and Promotion (DIPP), the foreign direct investment (FDI) equity inflows towards the construction development sector in India was around $ 24.67 billion during the period April 2000 to December 2017. The Government of India along with the state governments has reportedly taken various measures to boost the real estate sector. The real estate sector’s growth prospects in 2018 look bright. The tax on various inputs of real estate sector has been reduced after November 15, 2017. The following table provides a comparison.

The growth of the real estate industry automatically enhances the growth of its allied industries. These allied industries include cement, bricks, tiles, marbles, plywood, home appliances, interior decoration and many more.

Anil Mathur, COO, Interio Division, Godrej & Boyce, told BE, “Furniture plays a very important role in the interior design of any space. Estimated to be over 50,000 crores, the furniture market in India has historically witnessed a prolific boom. It’s also important to note that 60% of this total sector is focused towards home furniture. The growing economy that has positively impacted the growth of real estate properties has also impelled the sale of branded furniture items. I believe this sector is going to grow further with an accelerated growth in the service industry.”

A recent PricewaterhouseCoopers (PwC) report recommends that the domestic home appliance and consumer electronics market is expected to grow by 10% on a Compounded Annual Growth Rate (CAGR) till 2022. Namit Bajoria, Managing Director, Kutchina Kitchen Appliances, informed BE, “The real estate industry, which is a bubble sector in India, is slated to grow by 30% by the 2022. This projected growth creates room for us to grow in leaps and bounds. Since the policy for real estate customers has become much more transparent, we can expect a major fillip in the market. That will augur well for our sector, because ‘a dream home is complete with a dream kitchen only.’ ”

The marble industry also depends largely on the real estate sector. Ravi Meghwal, CEO, R. K. Marble, India, informed, “The marble industry is seeing a drastic boom. The industry is expected to grow to $180 billion by 2020. India ranks as one of the highest producers of dimensional stones, accounting for over 27% of world stone production and employing over two million people. Rajasthan produces 90% of India's marble - out of 33 districts of Rajasthan, 20 districts have marble in one or other form. The Compound Annual Growth Rate (CAGR) of 15% for the stone industry looks good for us. However, there is need for some reforms.”

The brick industry is integrally related to the real estate sector. Fly ash bricks are emerging strongly in the Indian market. Abhishek Agarwal, Director, Harden Bricks Pvt. Ltd., told BE, “We manufacture fly ash bricks, blocks, and allied products. The future of fly ash bricks looks very bright vis-à-vis the boom in the real estate industry since the product is environmentally friendly and has several advantages over the traditional red clay bricks, which are fast losing popularity. Bricks lay the foundation for any construction activity and no wonder, more and more people are switching to fly ash. Our product is more durable and cost-effective. We’re grateful that the government has made it mandatory to use fly ash bricks within a 300 kilometre radius of any thermal power plant. Using fly ash bricks also helps to protect fertile soil and involves zero greenhouse gas emission.”

Interior designing and furniture planning are an art that can transform living spaces. The furniture industry is directly related to the growth of real estate. Nilanjan Saha, EO and Head of Marketing, S. A. Plywood, told BE, “On the basis of end-use, the plywood market is segmented into commercial and residential segments. The residential sector is the largest consumer for Indian plywood, accounting for more than half of the total shares. Already, the Indian plywood market reached a value of $ 4.2 billion due to increasing urbanisation and investment in the real estate sector. Moreover, the introduction of new designs has further helped in creating a demand among the real estate consumers. Owing to this, the industry is expected to reach a value of $ 5.5 Billion by 2023.”

Chandan Maitra, a renowned engineer, informed BE, “Various innovations can be encouraged in this sector that will allow the development of new industries. Small bamboo board factories may be developed at various village centres and districts for preparing doors and windows, replacing wood. Tiles factories may look to promote decorative terracotta tiles for beautification. Bamboo furniture can be promoted as an environment-friendly and cost-effective alternative.”